Several Republican presidential candidates are floating the idea of returning to some form of a gold standard in the U.S., although none have gone into any great detail. So, how might a modern gold standard work?

It’s a question that requires us to do more than just look to the past with an eye toward “restoring,” “bringing back,” or “returning to” gold-backed money. Sound money advocates need to also think creatively about how to adapt hard money principles to the current and future needs of a dynamic and digital-based economy.

Don’t get me wrong, the long history of gold and silver being used as money going back to ancient times still matters. The basic principles behind sound money are timeless. Computer technology may make it easier than ever for central banks to create and manipulate digital fiat currency units, but easy doesn’t mean honest.

For better or worse, the digital economy is here to stay. It can be mostly for the better. There is nothing inherently dishonest about e-commerce or smartphone payments, and there is no reason why gold and silver can’t integrate into these and future systems.

In fact, the digital economy opens up a world of new opportunities for free-market alternative currencies to take hold. Alternative currencies and alternative banking backed ultimately by physical precious metals could represent the biggest threat to the Federal Reserve’s fiat currency regime.

Sound money advocates should be open to new applications of sound money principles. If we don’t, then our movement will be perceived as backward looking, out of touch, antiquated. No matter how strongly we make the case for the merits of a currency backed by gold and silver, if people associate hard money exclusively with the past, they won’t perceive it as necessary or viable today.

Anyone who thinks that hard money requires the direct exchange of gold and silver coins throughout the economy is flat-out wrong. Even during the height of the U.S. gold standard system in the late 19th century, gold coins were more likely to be held as savings than to be spent directly in the economy. People more commonly paid for goods and services using silver coins or paper banknotes that were ultimately redeemable in gold.

Gold and Silver Can Easily Be Transacted Electronically

It’s possible to have a gold-based dollar in which all dollars are paper or digital certificates. As long as holders of dollars, in whatever form, have the ability to redeem them in gold on demand they are as good as gold.

It may well be that coins minted out of gold and silver never circulate widely as transactional currency again. They will continue to be hoarded as savings and stashed for use as money during emergencies should the need arise.

There are advantages to being able to exchange gold and silver value indirectly. If you’ve ever bought a bag of pre-1965 90% silver coins, you know how silver coins can wear out over time. It’s not a problem for investors who buy junk silver in bulk by its total silver content (wear being factored in). But it can be a problem in transactions when a heavily worn coin no longer holds its full intrinsic value. (The Coinage Act of 1792 defined a dollar as 371.25 grains of silver.)

A debit card balance or a crypto-currency unit linked to a specific quantity of silver sitting in a secure vault solves that problem.

It also solves the problem of conventional account balances being intrinsically worthless. Bitcoin is ultimately backed by nothing, while bank account balances represent IOUs backed by nothing but the “full faith and credit” of the banks and U.S. government.

It is the notion of faith in a central authority that is antiquated. Central planning is the true “barbarous relic” of the 20th Century.

Today, virtually no professional economists believe a Soviet-style centrally planned economy works. Yet even though the Soviet Union collapsed more than two decades ago, its discredited central planning model persists to this day when it comes to currencies and interest rates. Central bankers are still being given the power to set interest rates for the whole economy, even though they have proven to be unskilled at best (and often downright inept) at forecasting economic cycles and preventing financial bubbles and busts.

Since 2009, the destructive Federal Reserve System has pumped trillions of fiat dollars into the banking system and Wall Street, effectuating a massive wealth transfer and putting the dollar’s global credibility at risk.

This hybrid monetary system would keep the central bankers in power but reinstitute gold as a constraint on their capacity to inflate. Even though the Forbes proposal is not an ideal free-market monetary system, it could serve as a model for reforming the existing system – and eventually transitioning to one that does away with the Federal Reserve altogether.

Ending the Fed could mean establishing a new gold and silver standard (perhaps through a Constitutional amendment that fixes the dollar’s value in terms of gold and/or silver).

Or a gold standard could be achieved by ending government’s legal tender monopoly entirely and letting free-market currencies take over (some of which may be redeemable in precious metals; others of which may not).

Electronic gold and silver payments using innovations like BitGold and the Gold Standard Society’s Digital Gold 2.0 may prove in the future that free-market hard money is viable for everyday transactions. All it will then need is the right to compete directly with the U.S. dollar as legal tender.

Stefan Gleason is President of the Sound Money Defense League, a national grassroots lobbying organization working to restore gold & silver to their historical role as America’s constitutional money. He also leads Money Metals Exchange, a national precious metals dealer with over 50,000 customers. Gleason has frequently appeared on national television networks such as CNN, FoxNews, & CNBC, & his writings have appeared in hundreds of publications such as the Wall Street Journal, TheStreet.com, Seeking Alpha, Detroit News, Washington Times, & National Review.

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The best, and really the only way to buy silver for the past several months has been SLV, those 3 little letters that turn a large segment of the stacking population’s faces crimson. The premiums on gold are still fine, so buy some bars and/or coins if you want, so long as they’re above ounce weight. Always a bad idea to invest in anything for ideological reasons, or based on stories (the COMEX default rhetoric), but precious metals are likely near a bottom despite deflationary pressures due to persist, while equities have been transitioning into a bear market since the latter half of 2014, so it’s not bad advice to suggest buying INTO DIPS, not rallies. If you already have a comfortable position in metals and are looking to invest in something physical for the long term, oil is a better knife to catch by way of a single leveraged crude ETF.